The Central Bank of Nigeria (CBN) on Friday, January 24; sent a cautionary note to the Federal Government in respect of the rising debt profile of the country.
This was contained in a statement issued by the President; Godwin Emefiele, while briefing journalists after the CBN’s Monetary Policy Committee (MPC) meeting.
He called for dampers to be put in place in a bid to subdue the adverse effects of oil price decline on the economy.
The Debt Management Office (DMO) has last Friday, through Patience Oniha, its Director-General; said that the country’s public debt stood at N26.215 trillion at Q3 2019.
Emefiele observed that there was room for economic expansion in 2020. This is with the CBN putting its growth projection at 2.35% compared to the 2.1% set by the World Bank; and the 2.5% forecast by the International Monetary Fund (IMF).
Even though Mr Emefiele remarked that the projections were premised on improved credit flow to the real sector; implementation of the Economic Recovery and Growth Plan (ERGP) and the CBN intervention in agriculture and the MSME; he expressed worry that the economy was facing a number of threats.
These he identified as insecurity, absence of fiscal buffers, escalating debt profile, dilapidated infrastructure and weak private sector investment.
The MPC enjoined the FG to cut down dependence on oil receipts and broaden its revenue sources; by reforming the tax system.
Emefiele said “the MPC, however, cautioned that public debt was rising faster than both domestic and external revenue; noting the need to tread cautiously in interpreting the debt to GDP ratio.
“The committee also noted the rising burden of debt services and urged the fiscal authorities to strongly consider building buffers; by not sharing all the proceeds from the Federation Account at the monthly Federation Account Allocation Committee meetings to avert a macroeconomic downturn; in the event of an oil price shock.
“It urged the government to gradually reduce reliance on oil receipts and focus on revenue diversification through reforms of the tax system.”
According to Emefiele, the committee did this in order to curb the rising level of inflation in the country; which according to the National Bureau of Statistics hit 11.98% in December 2019.